Foreclosure monitor may be required in possible US bank deal

A third-party monitor may be required as part of any settlement of a probe by 50 state attorneys general to ensure that banks comply with foreclosure practices, Connecticut Attorney General George Jepsen said.

A settlement should include a mechanism to supervise bank practices, Jepsen said yesterday in a phone interview. Jepsen, who succeeded Richard Blumenthal as attorney general, said the framework for any deal is months away. The third-party monitor could be a law firm, he said.

“It’s one of the many issues under discussion,” Jepsen said. Any such oversight could last a couple years, he said. “There’s going to be a need for some kind of process to make sure the banks do what they promise to do,” he said.

All 50 US states are investigating foreclosure practices and pushing for banks and mortgage servicers to overhaul their procedures for seizing homes. The probe, announced in October, came after banks, including JPMorgan Chase & Co and Bank of America, stopped repossessions to review their foreclosure practices.

Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, declined to comment. Miller is leading the 50-state investigation.

“We continue to work with Attorney General Miller to arrive at an industrywide multistate resolution,” Jumana Bauwens, a Bank of America spokeswoman, said in an e-mail.

Thomas Kelly, a JPMorgan spokesman, declined to comment.

Ally Financial Inc.’s GMAC Mortgage unit, which halted evictions in 23 states in September, said yesterday that it agreed to drop about 250 foreclosure cases in Maryland that were tied to defective affidavits.